A new California Court of Appeal opinion provides greater clarity on an employer’s ability to deduct exempt employees’ vacation leave on account of partial-day absences without affecting the employees’ exempt status. Prior to this case, some people believed that an employer could only deduct vacation leave if an employee was absent for 4 or more hours. This belief was based on Conley v. Pacific Gas & Electric Co. (2005) 141 Cal.App.4th 260. In Conley the court upheld PG&E’s policy of deducting for absences of 4 hours or more. However, because the court made no indication in that case of whether or not an employer could deduct for absences of less than 4 hours, it remained on open question to some of whether policies requiring deduction for short absences were permissible.
This new case answers that question. An employer can deduct exempt employees’ vacation leave based on partial-day absences, regardless of the duration without affecting the employees’ exempt status. So long as the exempt employees receive a set salary, the employer can establish policies requiring employees use their vacation time for partial-day absences of any length.
This new case confirms the position currently taken by the Division of Labor Standards and Enforcement, and which was set forth in a 2009 Opinion Letter. In the Opinion Letter, the DLSE concluded that Conley did not intend to establish a 4 hour limitation. See Dept. of Industrial Relations, DLSE, Chief Counsel Robert R. Roginson, Opn. Letter No. 2009.11.23, Deductions for Partial and Full Day Absences of Exempt Employees (Nov. 23, 2009) p. 7, <https://www.dir.ca.gov/dlse/opinions/2009-11-23.pdf >.
In light of this new case, employers can be rest assured that both the DLSE and the Courts will permit employers to establish policies requiring deduction of vacation based on partial-day absences of any length. Employers should of course consider whether or not it makes practical sense for them to have policies deducting vacation leave for absences of less than 4 hours.
The court’s opinion can be found at: http://www.courts.ca.gov/opinions/documents/D064517.PDF